– UK, Manchester – The Co-op Group (LSE:87GO), today announces that Richard Pennycook is to step down as Group CEO and will be succeeded by Steve Murrells, currently CEO of the Co-op’s food business.
This announcement is part of transition arrangements for the Group as it prepares to move from the successful Rebuild phase of its turnaround to the Renewal phase.
Richard Pennycook, who joined the Co-op at the height of its crisis in 2013 and has led its Rescue and Rebuild phases, will step down as CEO after a short transition to Steve Murrells, currently the CEO of the Co-op’s food business, who now becomes Group CEO.
The Group has made great progress on rebuilding the Co-op, with businesses performing strongly over the past two years and Rebuild plans starting to deliver value for our members.
As the Group enters the third and final year of its Rebuild, the attention of the leadership turns to planning for Renewal – a long term phase which will seek to put the Co-op once again at the heart of communities in the UK, championing causes that are important to them and trading with an ethical heart and a social conscience.
Richard Pennycook, who joined the Co-op on an interim basis having put on hold a planned portfolio career, has signalled that he now wishes to return to that plan. The strength of the management team, built during the turnaround, gives the Board great confidence that the transition to new leadership under Steve Murrells will be seamless.
Steve Murrells joined the Group to run its food business in 2012 and has led a highly successful turnaround which has seen Co-op Food outperform the market for 18 consecutive periods. He joins the Group Board on 1 March and Richard will step down from the Board that day. Richard, however, has agreed to act as an advisor to the Group, primarily focusing on its relations with the Co-operative Bank.
Pippa Wicks, currently Chief Operating Officer of the Group, becomes Deputy CEO with responsibility for delivery of the remaining aspects of the Group’s transformation.
Jo Whitfield who is currently Finance Director of our food business will become CEO of Co-op Food on an interim basis.
Allan Leighton, Chair of the Co-op, said: “Richard Pennycook saved our Co-op. In three short years he has rescued and rebuilt our business and restored pride to our 70,000 colleagues and 4.5 million members. We owe Richard a huge debt of gratitude and his place in Co-op history is secured.
“We are fortunate to have Steve as our new Group CEO. He is a natural co-operator, a great leader and has already done so much to return our Co-op to its former glory. Steve has transformed our food business and put it back at the heart of communities across the country. His leadership has seen our Co-op consistently outperform the market in food and he is the right and unanimous choice to now take the whole Group forward for the next phase of our transformation.
Richard Pennycook said: “Leaving the Co-op was always going to be hard, but the time is right. The CEO who is to lead the Renewal phase in 2018 has to be the CEO who builds the plan in 2017. In passing the baton to Steve, I leave safe in the knowledge that the Co-op will be taken forward by a leader who shares our vision of what can be achieved in the future. Steve has a terrific team around him and an organisation that has rediscovered its self-confidence. I could not be more proud of them all and wish them great success in the future.”
Steve Murrells said: “I’m honoured to have this opportunity to lead our Co-op and to serve our millions of members. I take over at one of the most exciting times in our 150 year history. All the signs are that consumers are looking for a different type of business, one that looks after them and their communities and I truly believe that the Co-op is that business. We have amazing colleagues and a growing and more engaged membership. Now is our time and we are ready to show the country that good businesses that do good things offer a better future for us all.”
President of the Co-op National Members Council, Nick Crofts, said: “Our Co-op survived the crisis of 2013 largely down to Richard Pennycook’s leadership, and on behalf of our millions of members I thank him for that. Steve Murrells is Co-op through and through and a fantastic choice to lead our business into the future. I was delighted to have been part of the appointment process and look forward to working with Steve to strengthen and grow our membership.”
Steve will remain on his current reward package when he takes on the role of Group Chief Executive. His salary will remain at £750,000 a year. He will continue to participate in an annual incentive plan and a long term incentive plan. Under each of these plans no payment is made if a threshold target is not met. If this is met he can earn between 50-100% of salary under each plan. 100% of salary would only be paid if stretch targets are met and the Remuneration Committee is happy that this level of payment is justified.
Richard’s contract requires a 6 month notice period. It has been agreed that this will be shortened and he will remain as Group Chief Executive until 1 March 2017 when he will also step down from the Board. His employment will end on 31 March 2017. He will be paid his normal salary and benefits until this date.
Richard has worked for the whole of the performance periods which apply to the 2016 annual incentive plan and the 2014-2016 long term incentive plan and will receive any payments due under these schemes. Performance targets will continue to apply and be considered in the usual way when our results for 2016 are known. Richard will receive no annual incentive plan or long-term incentive plan awards for 2017.
His 2015-2017 and 2016-2018 long term incentive plan awards will remain in place and will be reduced to reflect the time he will have worked during the three-year performance period. The original targets, performance period and rules will continue to apply and any payment due will be paid on the normal date.
Richard has agreed to act as an advisor to the Group, primarily focusing on its relations with the Co-operative Bank. This arrangement will be reviewed on a quarterly basis and he will be paid a fee of £20,000 a month while the consultancy arrangement is in place.
Additional information on reward arrangements for Directors and the Executive team, and on our incentive schemes, can be found in our 2015 Annual Report. Full information on Director and Executive team pay will be included in our 2016 Annual Report.
For more information : http://www.coop.co.uk
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